MacroResearchBoard

Will Protectionism Be Back On The Agenda? – November 11, 2024

A just-published report updated our investment recommendations in view of the U.S. election outcome and ongoing DM policy rate cuts. We remain moderately pro-growth, with the U.S. economy still enjoying solid momentum and with increasing prospects for an improvement elsewhere as monetary conditions ease further.

Investors bought “America” last week, in anticipation of an even more pro-growth U.S. backdrop. The Republican sweep will give President-elect Trump the executive and legislative capability to enact major fiscal, regulatory and other policy changes. Deregulation, lower taxes and a general pro-business environment will help to sustain the already robust economic expansion.

However, there are other risks further down the road to consider, one of which nearly tripped up the U.S. and, especially, global economy during Trump’s first tenure, namely trade tariffs and protectionism. For now, investors are giving Trump the benefit of the doubt and are assuming his proposed trade policies are just negotiating positions, rather than a desired end point.

Net: “trading” protectionism proved profitable in 2018-2019, and may well come into play in 2025 and beyond – stay tuned.